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dc.contributor.authorFAIA, Ester
dc.contributor.authorGIULIODORI, Massimo
dc.contributor.authorRUTA, Michele
dc.date.accessioned2011-04-19T12:47:31Z
dc.date.available2011-04-19T12:47:31Z
dc.date.issued2008
dc.identifier.citationJournal of Applied Economics, 2008, 11, 1, 1-32
dc.identifier.issn1514-0326
dc.identifier.urihttp://hdl.handle.net/1814/16459
dc.description.abstractThis paper presents a political economy model of exchange rate policy. The theory is based on a common agency approach with rational expectations. Financial and exporter lobbies exert political pressures to influence the government's choice of exchange rate policy, before shocks to the economy are realized. The model shows that political pressures affect exchange rate policy and create an over-commitment to exchange rate stability. This helps to rationalize the empirical evidence on fear of large currency swings that characterizes exchange rate policy of many emerging market economies. Moreover, the model suggests that the effects of political pressures on the exchange rate are lower if the quality of institutions is higher. Empirical evidence for a large sample of emerging market economies is consistent with these findings.
dc.language.isoen
dc.publisherUniv Cema
dc.subjectexporters and financial lobbies
dc.subjectexchange rate stability
dc.titlePolitical Pressures and Exchange Rate Stability in Emerging Market Economies
dc.typeArticle
dc.identifier.volume11
dc.identifier.startpage1
dc.identifier.endpage32
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dc.identifier.issue1


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